I saw Lakshya (meaning goal) yesterday for the first time. It is an India war film revolving around the life of a person ( Hrithik Ro...

What Makes a Startup Investable?

Not all startups get funded. Different investors have different focus areas
and points they consider before making an investment.

That said, I feel that entrepreneurs definitely need to figure out the
following before approaching investors.

Proof of Concept –
Has the business done enough to prove that the market is big enough and customers
are adopting the product/service. Generally startups go in for a beta launch to
do this. A limited number of people from the target market are exposed to the
product and their behavior is analysed and recorded.

Scalability –
Investors want to invest in big markets. Very few investors get excited by a business
operating in a very small niche. Entrepreneurs must identify how big the potential
market is and must ensure that it is big enough for an investor to potentially get
a good return.

Barrier to Entry –
This is important and often a reason for unsuccessful pitches. Investors prefer
that the business model of the startup cannot be replicated easily by existing
players in the market. For example, during my previous startup Beveragewala
where we were selling teas and coffees online, investors felt that players like
Amazon could enter this space and hence we did not stand a chance in the longer
term. It is crucial for an entrepreneur to work out why his/her startup has an
advantage which is sustainable. This can be a first mover advantage, an IP, a
location advantage etc.

Team – The startup
must have a strong team which is capable to execute the business. A perfect
team is one which has all requisite skills which are required to run and grow
the business.